1. Motivation: “Necessity is the Mother of Invention” Data explosion problem –Automated data collection tools and mature database technology lead to tremendous amounts of data stored in databases, data warehouses and other information repositories We are drowning in data, but starving for knowledge! Solution: Data warehousing and data mining –Data warehousing and on-line analytical processing –Extraction of interesting knowledge (rules, regularities, patterns, constraints) from data in large databases

2. Why Mine Data? Commercial Viewpoint Lots of data is being collected and warehoused –Web data, e-commerce –purchases at department/ grocery stores –Bank/Credit Card transactions Computers have become cheaper and more powerful Competitive Pressure is Strong –Provide better, customized services for an edge (e.g. in Customer Relationship Management)

3. Why Mine Data? Scientific Viewpoint Data collected and stored at enormous speeds (GB/hour) –remote sensors on a satellite –telescopes scanning the skies –microarrays generating gene expression data –scientific simulations generating terabytes of data Traditional techniques infeasible for raw data Data mining may help scientists –in classifying and segmenting data –in Hypothesis Formation

4. What Is Data Mining? Data mining (knowledge discovery in databases): –Extraction of interesting ( non-trivial, implicit, previously unknown and potentially useful) information or patterns from data in large databases Alternative names and their “inside stories”: –Data mining: a misnomer? –Knowledge discovery(mining) in databases (KDD), knowledge extraction, data/pattern analysis, data archeology, business intelligence, etc.

5. Examples: What is (not) Data Mining? l What is not Data Mining? – Look up phone number in phone directory – Query a Web search engine for information about “Amazon” l What is Data Mining? – Certain names are more prevalent in certain US locations (O’Brien, O’Rurke, O’Reilly… in Boston area) – Group together similar documents returned by search engine according to their context (e.g. Amazon rainforest, Amazon.com,)

6. Data Mining: Classification Schemes Decisions in data mining –Kinds of databases to be mined –Kinds of knowledge to be discovered –Kinds of techniques utilized –Kinds of applications adapted Data mining tasks –Descriptive data mining –Predictive data mining

7. Decisions in Data Mining Databases to be mined –Relational, transactional, object-oriented, object-relational, active, spatial, time-series, text, multi-media, heterogeneous, legacy, WWW, etc. Knowledge to be mined –Characterization, discrimination, association, classification, clustering, trend, deviation and outlier analysis, etc. –Multiple/integrated functions and mining at multiple levels Techniques utilized –Database-oriented, data warehouse (OLAP), machine learning, statistics, visualization, neural network, etc. Applications adapted –Retail, telecommunication, banking, fraud analysis, DNA mining, stock market analysis, Web mining, Weblog analysis, etc.

8. Data Mining Tasks Prediction Tasks –Use some variables to predict unknown or future values of other variables Description Tasks –Find human-interpretable patterns that describe the data. Common data mining tasks –Classification [Predictive] –Clustering [Descriptive] –Association Rule Discovery [Descriptive] –Sequential Pattern Discovery [Descriptive] –Regression [Predictive] –Deviation Detection [Predictive]

9. Classification: Definition Given a collection of records (training set ) –Each record contains a set of attributes, one of the attributes is the class. Find a model for class attribute as a function of the values of other attributes. Goal: previously unseen records should be assigned a class as accurately as possible. –A test set is used to determine the accuracy of the model. Usually, the given data set is divided into training and test sets, with training set used to build the model and test set used to validate it.

10. Classification: Application 1 Direct Marketing –Goal: Reduce cost of mailing by targeting a set of consumers likely to buy a new cell-phone product. –Approach: Use the data for a similar product introduced before. We know which customers decided to buy and which decided otherwise. This {buy, don’t buy} decision forms the class attribute. Collect various demographic, lifestyle, and company- interaction related information about all such customers. –Type of business, where they stay, how much they earn, etc. Use this information as input attributes to learn a classifier model.

11. Classification: Application 2 Fraud Detection –Goal: Predict fraudulent cases in credit card transactions. –Approach: Use credit card transactions and the information on its account-holder as attributes. –When does a customer buy, what does he buy, how often he pays on time, etc Label past transactions as fraud or fair transactions. This forms the class attribute. Learn a model for the class of the transactions. Use this model to detect fraud by observing credit card transactions on an account.

12. Classification: Application 3 Customer Attrition/Churn: –Goal: To predict whether a customer is likely to be lost to a competitor. –Approach: Use detailed record of transactions with each of the past and present customers, to find attributes. –How often the customer calls, where he calls, what time-of-the day he calls most, his financial status, marital status, etc. Label the customers as loyal or disloyal. Find a model for loyalty.

13. Classification: Application 4 Sky Survey Cataloging –Goal: To predict class (star or galaxy) of sky objects, especially visually faint ones, based on the telescopic survey images (from Palomar Observatory). –3000 images with 23,040 x 23,040 pixels per image. –Approach: Segment the image. Measure image attributes (features) - 40 of them per object. Model the class based on these features. Success Story: Could find 16 new high red-shift quasars, some of the farthest objects that are difficult to find!

14. Classifying Galaxies Early Intermediate Late Data Size: 72 million stars, 20 million galaxies Object Catalog: 9 GB Image Database: 150 GB Class: Stages of Formation Attributes: Image features, Characteristics of light waves received, etc.

15. Clustering Definition Given a set of data points, each having a set of attributes, and a similarity measure among them, find clusters such that –Data points in one cluster are more similar to one another. –Data points in separate clusters are less similar to one another. Similarity Measures: –Euclidean Distance if attributes are continuous. –Other Problem-specific Measures.

16. Illustrating Clustering xEuclidean Distance Based Clustering in 3-D space. Intracluster distances are minimized Intracluster distances are minimized Intercluster distances are maximized Intercluster distances are maximized

17. Clustering: Application 1 Market Segmentation: –Goal: subdivide a market into distinct subsets of customers where any subset may conceivably be selected as a market target to be reached with a distinct marketing mix. –Approach: Collect different attributes of customers based on their geographical and lifestyle related information. Find clusters of similar customers. Measure the clustering quality by observing buying patterns of customers in same cluster vs. those from different clusters.

18. Clustering: Application 2 Document Clustering: –Goal: To find groups of documents that are similar to each other based on the important terms appearing in them. –Approach: To identify frequently occurring terms in each document. Form a similarity measure based on the frequencies of different terms. Use it to cluster. –Gain: Information Retrieval can utilize the clusters to relate a new document or search term to clustered documents.

19. Association Rule Discovery: Definition Given a set of records each of which contain some number of items from a given collection; –Produce dependency rules which will predict occurrence of an item based on occurrences of other items. Rules Discovered: {Milk} --> {Coke} {Diaper, Milk} --> {Beer} Rules Discovered: {Milk} --> {Coke} {Diaper, Milk} --> {Beer}

20. Association Rule Discovery: Application 1 Marketing and Sales Promotion: –Let the rule discovered be {Bagels, … } --> {Potato Chips} –Potato Chips as consequent => Can be used to determine what should be done to boost its sales. –Bagels in the antecedent => C an be used to see which products would be affected if the store discontinues selling bagels. –Bagels in antecedent and Potato chips in consequent => Can be used to see what products should be sold with Bagels to promote sale of Potato chips!

21. Association Rule Discovery: Application 2 Supermarket shelf management. –Goal: To identify items that are bought together by sufficiently many customers. –Approach: Process the point-of-sale data collected with barcode scanners to find dependencies among items. –A classic rule -- If a customer buys diaper and milk, then he is very likely to buy beer:

22. Data Mining: A KDD Process –Data mining: the core of knowledge discovery process. Data Cleaning Data Integration Databases Data Warehouse Task-relevant Data Data Selection Data Preprocessing Data Mining Pattern Evaluation

23. Steps of a KDD Process Learning the application domain: –relevant prior knowledge and goals of application Creating a target data set: data selection Data cleaning and preprocessing: (may take 60% of effort!) Data reduction and transformation: –Find useful features, dimensionality/variable reduction, invariant representation. Choosing functions of data mining – summarization, classification, regression, association, clustering. Choosing the mining algorithm(s) Data mining: search for patterns of interest Pattern evaluation and knowledge presentation –visualization, transformation, removing redundant patterns, etc. Use of discovered knowledge

24. Data Mining and Business Intelligence Increasing potential to support business decisions End User Business Analyst Data Analyst DBA Making Decisions Data Presentation Visualization Techniques Data Mining Information Discovery Data Exploration OLAP, MDA Statistical Analysis, Querying and Reporting Data Warehouses / Data Marts Data Sources Paper, Files, Information Providers, Database Systems, OLTP

25. Data Mining: On What Kind of Data? Relational databases Data warehouses Transactional databases Advanced DB and information repositories –Object-oriented and object-relational databases –Spatial databases –Time-series data and temporal data –Text databases and multimedia databases –Heterogeneous and legacy databases –WWW

26. Data Mining: Confluence of Multiple Disciplines Data Mining Database Technology Statistics Other Disciplines Information Science Machine Learning Visualization

27. Data Mining vs. DBMS Example DBMS Reports –Last months sales for each service type –Sales per service grouped by customer sex or age bracket –List of customers who lapsed their policy Questions answered using Data Mining –What characteristics do customers that lapse their policy have in common and how do they differ from customers who renew their policy? –Which motor insurance policy holders would be potential customers for my House Content Insurance policy?

28. Data Mining and Data Warehousing Data Warehouse: a centralized data repository which can be queried for business benefit. Data Warehousing makes it possible to –extract archived operational data –overcome inconsistencies between different legacy data formats –integrate data throughout an enterprise, regardless of location, format, or communication requirements –incorporate additional or expert information OLAP: On-line Analytical Processing Multi-Dimensional Data Model (Data Cube) Operations: –Roll-up –Drill-down –Slice and dice –Rotate

29. DBMS, OLAP, and Data Mining DBMSOLAPData Mining Task Extraction of detailed and summary data Summaries, trends and forecasts Knowledge discovery of hidden patterns and insights Type of resultInformationAnalysisInsight and Prediction Method Deduction (Ask the question, verify with data) Multidimensional data modeling, Aggregation, Statistics Induction (Build the model, apply it to new data, get the result) Example question Who purchased mutual funds in the last 3 years? What is the average income of mutual fund buyers by region by year? Who will buy a mutual fund in the next 6 months and why?

30. Example of DBMS, OLAP and Data Mining: Weather Data Dayoutlooktemperaturehumiditywindyplay 1sunny85 falseno 2sunny8090trueno 3overcast8386falseyes 4rainy7096falseyes 5rainy6880falseyes 6rainy6570trueno 7overcast6465trueyes 8sunny7295falseno 9sunny6970falseyes 10rainy7580falseyes 11sunny7570trueyes 12overcast7290trueyes 13overcast8175falseyes 14rainy7191trueno DBMS:

31. Example of DBMS, OLAP and Data Mining: Weather Data By querying a DBMS containing the above table we may answer questions like: What was the temperature in the sunny days? {85, 80, 72, 69, 75} Which days the humidity was less than 75? {6, 7, 9, 11} Which days the temperature was greater than 70? {1, 2, 3, 8, 10, 11, 12, 13, 14} Which days the temperature was greater than 70 and the humidity was less than 75? The intersection of the above two: {11}

32. Example of DBMS, OLAP and Data Mining: Weather Data OLAP: Using OLAP we can create a Multidimensional Model of our data (Data Cube). For example using the dimensions: time, outlook and play we can create the following model. 9 / 5sunnyrainyovercast Week 10 / 22 / 12 / 0 Week 22 / 11 / 12 / 0

33. Example of DBMS, OLAP and Data Mining: Weather Data Data Mining: Using the ID3 algorithm we can produce the following decision tree: outlook = sunny –humidity = high: no –humidity = normal: yes outlook = overcast: yes outlook = rainy –windy = true: no –windy = false: yes

34. Major Issues in Data Warehousing and Mining Mining methodology and user interaction –Mining different kinds of knowledge in databases –Interactive mining of knowledge at multiple levels of abstraction –Incorporation of background knowledge –Data mining query languages and ad-hoc data mining –Expression and visualization of data mining results –Handling noise and incomplete data –Pattern evaluation: the interestingness problem Performance and scalability –Efficiency and scalability of data mining algorithms –Parallel, distributed and incremental mining methods

35. Major Issues in Data Warehousing and Mining Issues relating to the diversity of data types –Handling relational and complex types of data –Mining information from heterogeneous databases and global information systems (WWW) Issues related to applications and social impacts –Application of discovered knowledge Domain-specific data mining tools Intelligent query answering Process control and decision making –Integration of the discovered knowledge with existing knowledge: A knowledge fusion problem –Protection of data security, integrity, and privacy